Record £7.8m claim sends warning to HR

The largest ever sex discrimination claim heard by a UK employment tribunal
could impact all HR departments, potentially increasing their workload and
forcing them to be more open on pay, experts predict.

The case of Stephanie Villalba, who is seeking £7.8m damages from investment
bank Merrill Lynch for gender discrimination, unfair dismissal and unequal pay,
began last week in Croydon, south London.

Regardless of the outcome, companies will be forced to be more transparent
about payment and bonus decisions in the future, according to Daniel Isaac,
employment lawyer at Withers, meaning more monitoring and paperwork for HR.

"In the long run, there will be more of a paper trail for employees,
regarding how they were promoted, how their performance is judged and how
bonuses are worked out," he said. "Companies will need to document
how and why decisions were made."

The CIPD has said Villalba’s claim is a wake-up call for companies that have
not addressed pay equality.

Mark Childs, group compensation and benefits director at security firm
Chubb, agreed that the case is likely to be a "significant milestone"
in the effort to change the culture of secrecy over pay, particularly in
financial services.

"The hope is that financial services will move to more objective
criteria to quantify people’s bonuses," he said. "HR has the
responsibility to convince line managers of the impact this change will have on
protecting their business."

Finance union Unifi said HR will have to do more to ensure pay levels are
more clearly laid out, and to show whether women are getting a fair deal.

"One of the problems within finance is that pay levels are not
transparent, meaning women in the industry earn 40 per cent less than
men," a union spokeswoman said. "Pay levels and terms and conditions
should be open, so people know what others are earning. The Government has done
some work in the area, but it is a personnel issue."

Merrill Lynch denies the allegations and is saying Villalba, who earned £1m
a year, was removed from her post because of financial losses. The case is
expected to last a month.

By Daniel Thomas

History of claims at Merrill Lynch

Merrill Lynch has paid out more than $100m (£54.3m) to settle
nearly 900 gender bias claims filed in recent years by female employees –
largely in the US – who alleged that the bank had a culture of gender discrimination.

Last month the company settled a 10-year battle with 1,000 of
its women brokers in America, who claimed the bank had a culture of bias
against women. A panel of arbitrators ordered Merrill Lynch to pay one banker,
Hydie Sumner, £1.2m in compensation.

Sexism and the City

– The biggest City payout to date was made in 2002 when Julie
Bower, a former Schroder Securities analyst, was awarded £1.4m, after it was
revealed that a note written by her boss said she had, "had cancer, been a
pain, now pregnant".

– In 2000, Kay Swinburne won a private settlement reportedly
worth £1m from former employers Deutsche Bank, after being called a "bit
of skirt".

– Law firm Tarlo Lyons paid about £250,000 to solicitor Sarah
Collins in March 2004. She said her job was cut when she became pregnant.

Guest editor says…

Beverley Shears, HR director at South West Trains, said:
"What-ever the outcome, it is a warning for any company that thinks lack
of transparency on pay and bonuses is acceptable. I can’t imagine a situation
where it would not be appropriate to communicate the criteria for bonuses. HR
is traditionally seen as responsible for pay but that is a cop-out – the board
is responsible for transparency."